ECO 335 Fall 2015

Economic Development

Class: M&W 5:30 6:50 pm

Instructor: Bo Li
in Melville Library E4320
Office: Social Behavior Science Building N621
Office Hours: M 1:00 - 2:00 pm
E-mail: bo.li.3@stonybrook.edu
W 4:30 - 5:20 pm

Most people today are better fed, clothed and housed than their predecessors two centuries
ago. They are healthier, live longer, and are better educated. Womens lives are less cen-
tered on reproduction and political democracy has gained a foothold ... [t]he last 200 years
has shown the greatest advance in the conditions of the worlds population ever achieved
in such a brief span of time. Richard Easterlin (2000) in The Worldwide Standard of
Living since 1800, Journal of Economic Perspectives 14(1).

Course Description: Despite the achievements listed above, nearly half the worlds population more
than 3 billion people live on less than $2/day and 1.2 billion of these live precariously in extreme
poverty, defined crudely as less than $1 a day. Differences in the quality of peoples lives and access to
basic political rights and social services across regions remain mind-bogglingly vast despite the appar-
ently available opportunities for the movement of goods, technology and resources. How could such
profound differences in economic and political opportunities have arisen in the first place, and why
do they persist in time? To answer this we must delve into an exploration of what drives individual
choices to save, invest and transform their societies, and how initial conditions and policy choices
made within and outside of these communities have shaped the range of possibilities and outcomes.
As we explore such questions we will not just rely on economic theories and empirical analysis but
also draw on insights and analysis from the fields of history, geography, political science, anthropology,
psychology and literature to try to better understand how the world economy we live in came about,
and it might change.

Learning Objectives: By the end of the course students are expected to have learned and under-
stood the assumptions behind many of the more important models, definitions and methods that have
been applied by economists to measure and understand poverty, income distribution, economic growth
and development, as well as models and frameworks for understanding population growth, migration,
patterns of investment and trade, the levels of provision of environmental protection and global public
goods, and models of conflict and bargaining over property rights and policy choices. Students also
develop a deeper appreciation of household livelihood strategies in developing countries and the rel-
ative merits of different accounts of the roles played by differences in geography, factor endowments,
colonial history, culture, politics, trade, and economic policy choices in shaping development outcomes.

Textbook: Economic Development, 12/E by Michael P. Todaro and Stephen C. Smith, Prentice Hall
(ISBN 9780133406788).
Understanding Poverty, by Abhijit V. Banerjee, Roland Benabou and Dilip Mookherjee, Oxford Uni-
versity Press (NOT REQUIRED)

Prerequisites: C or higher in ECO 303; MAT 126 or 131 or 141 or AMS 151

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Grading: Class grade will be based on four components: a presentation, two midterm exams and a
comprehensive final exam. Each midterm exam will count for 20% of your grade, the final will count for
40%. The remaining 20% will come from your presentation. Note that there will be no make-up exams
unless you have a valid reason (see below). If you have to miss an exam, the remainder of your grades
will have higher weight in calculating your semester grade. You must take the final to pass this course.

Presentation: You will work in groups of 4 or 5 people to present one of the chapters in Under-
standing Poverty to the class. One of the group members will have 10 minutes for the presentation.
You will have to summarize the main ideas and the conclusions of the article you are presenting. The
presentations will take place at the end of the semester, before the final. Dates will be announced in
advance. One grade will be assigned to the entire group.

Homework: There will be three or four homework. Your are NOT required to submit them, but its
good for you to finish them on time.

Course Outline: This is a broad list of topics and readings for each course section.

1. Principles and Concepts (Chapters 12) What do we mean by development? Measuring

development. Are standards of living converging? Are the conventional models of economics
useful?

2. Long run theories of comparative development, economic growth and income distri-
bution (Chapters 34 and parts of 12) Classic Theories. Modernization theories, structural
change models, Structuralist and Dependency theories. Neo-classical models: Solow growth,
comparative advantage and gains to trade, labor and capital movement. Models of endogenous
growth based on economies of scale. Theories of income distribution. Underdevelopment as a
coordination failure: poverty traps and the big push. Political Economy models of policy choice.
Midterm Exam 1

3. Micro-development economics (Chapters 58) Measuring poverty and inequality and so-
cial welfare. Explanations of the determinants of poverty, inequality, population dynamics,
migration, and health and human capital outcomes. Targeting and the design of public policy
interventions. Impact Evaluation studies. Insights from behavioral economics and field experi-
ments.
Midterm Exam 2

4. Institutions matter: property rights, conflict, governance and incentives (Chapters

911 and parts of 14 and 15) The origin and evolution of property rights, organizations, and
contracting patterns. Squatters and contracts in the informal economy. Enclosure movements.
Consequences of insecure property rights, land reforms and titling. Agriculture and its transfor-
mation. Environment and Development. Development policy making, the efficacy of aid. The
political economy of policymaking and the role of market, state and civil society organizations.
Case studies and debates.
Final Exam (December 10, 8:30pm-11:00pm)

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Class Conduct: Class atmosphere will be quite relaxed. Just a few guidelines to make sure:

Arriving a few minutes late is tolerated as long as you make an effort to minimize the disturbance
for other students.

Eating and drinking in class should be reduced to a minimum. It is not forbidden, but please
make sure that you are not disturbing others with noise and enticing aromas.

If you cannot make it to class for whatever reason, make sure that you know what happened
during the lecture that you missed.

If you make an appointment with me, keep it, or at least notify me ASAP that you cannot make
it.

Makeups: If you have a valid reason for a make-up exam, inform me ASAP. A valid reason is a
medical emergency, a death in the family, and, quite frankly, very little else. In all cases, you will be
expected to bring in proof.

Disclaimer:
Subsequent changes can be made to any part of this Syllabus when necessary. Any changes will be
announced in class and the new version of the syllabus will be posted in blackboard.

Americans with Disabilities Act:

If you have a physical, psychological, medical or learning disability that may impact your course work,
please contact Disability Support Services, ECC (Educational Communications Center) Building,
room128, (631) 632-6748. They will determine with you what accommodations, if any, are necessary
and appropriate. All information and documentation is confidential.

Academic Integrity:
Each student must pursue his or her academic goals honestly and be personally accountable for all
submitted work. Representing another persons work as your own is always wrong. Faculty are re-
quired to report any suspected instances of academic dishonesty to the Academic Judiciary. Faculty in
the Health Sciences Center (School of Health Technology and Management, Nursing, Social Welfare,
Dental Medicine) and School of Medicine are required to follow their school-specific procedures. For
more comprehensive information on academic integrity, including categories of academic dishonesty,
please refer to the academic judiciary website at http://www.stonybrook.edu/uaa/academicjudiciary/

Critical Incident Management: Stony Brook University expects students to respect the rights,
privileges, and property of other people. Faculty are required to report to the Office of University
Community Standards any disruptive behavior that interrupts their ability to teach, compromises the
safety of the learning environment, or inhibits students ability to learn. Faculty in the HSC Schools
and the School of Medicine are required to follow their school-specific procedures. Further information
about most academic matters can be found in the Undergraduate Bulletin, the Undergraduate Class
Schedule, and the Faculty-Employee Handbook.